stockmarket

Aston Martin shares plummet to record low


Aston Martin Lagonda shares tumbled to a new low on Thursday as pressure continued to mount on the British luxury carmaker amid a broader market rout.

Shares in Aston Martin fell by as much as 21% at one stage on Thursday to a record low of 371p – more than 80% lower than the £19 price when the company listed on the London Stock Exchange in October. They were later trading at 406p, still 13% lower on the day.

The carmaker, based in Garydon, Warwickshire, last month downgraded its sales forecasts for 2019 from about 7,250 vehicles to 6,400, citing macroeconomic uncertainty in the UK and Europe, which face slowing growth and the threat of a no-deal Brexit at the end of October.

Aston Martin’s weaker sales in the first half of the year – at a time when it needs to fund a new factory to build a make-or-break SUV, the DBX – have led many investors to question whether it will need to raise more money, potentially diluting the value of shares.

The worsening outlook has added to financial pressures. The rating agency Moody’s downgraded its rating on Aston Martin Lagonda’s debt in July, making it more expensive for the carmaker to borrow money. Hedge funds have also taken out a record level of short bets that its debt will fall in value, the Financial Times reported this week.

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Aston Martin made a loss of almost £80m in the first half and Tobias Wagner, a senior analyst at Moody’s, cited its lack of sales growth and its struggle for profits for the downgrade. He said Moody’s still views Aston Martin’s access to cash as “adequate”, but added that the broader weak environment in the UK and Europe and the continued need for heavy spending mean it could be squeezed.

“Meaningful negative free cash flow for 2019 and for 2020 do mean we see the liquidity profile weakening,” Wagner said, before the latest share price fall.

One equity analyst who covers the company said the downward move in Aston Martin shares was likely intensified by the broader negative mood on global stock markets, meaning few buyers were available for shares. The FTSE 100, of which Aston Martin is not a member, hit a five-month low on Thursday.

Markets across the world have been rattled by fears of a recession following the inversion of the US and UK government bond yield curves, a sign that investors believe that a contraction is imminent.

Aston Martin declined to comment.



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